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Probability of a negative balance

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Reference no: EM131081314

A company's cash position (measured in millions of dollars) follows a generalized Wiener process falling on average $0.2m per quarter with volatility of $1.3m per quarter. How high must the initial cash balance be for the probability of a negative balance after 1.75 years not to exceed5%?

a) $7.057m

b) $3.179m

c) $6.007m

d) $7.557m

e) None of the above.

Reference no: EM131081314

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